Homeowners have cut their asking prices by 1.2 per cent during the past month as the reality of the housing market downturn hits home, figures published today show.
But despite steadily falling prices, more than three million homeowners are expected to move over the next 12 months.
People in England and Wales putting their homes up for sale have cut their prices by nearly £3,000 during the five weeks to June 14 to an average £239,564, the latest survey by property website Rightmove says. The fall in asking prices has reduced annual house price growth to just 0.1 per cent.
The development, which followed a 1.2 per cent rise in asking prices in May, suggests that sellers have finally accepted that their home is not worth as much as it once was, it added.
The fall, which was the first recorded by Rightmove during June, traditionally seen as one of the peak months of the house-selling season, came as the average number of unsold properties on estate agents’ books rose to a record 75.
Miles Shipside, commercial director of Rightmove, said: “In spite of the lowest housing transactions for 30 years, new sellers had been coming to the market asking for record prices.
“It was a mad state of affairs that defied the laws of economics. Thankfully new sellers are now taking some pro-active steps to price more realistically from the outset to attract increasingly hard-pressed buyers.”
Rightmove said sales were still going through, and there was pent-up demand for the right property at the right price.
But it warned that the ratio of properties for sale to people who had successfully bought a new home had doubled during the past year to 15:1.
It added that “run-of-the-mill” properties that were not much different to others on the market had to stand out as “bargain buys” to sell. The widening gap between asking prices and what buyers are currently willing to pay or able to afford is behind the low level of transactions in the property market.
Rightmove said further reductions in asking prices would be required to sell homes where there was an oversupply, as buyer affordability continued to deteriorate against the backdrop of rising living costs and higher mortgage rates due to the credit crunch.
Mr Shipside said: “For most sellers that will mean whatever they thought of asking for their property at the peak of the boom, they need to take at least 10 ten per cent off. Otherwise their property will stagnate.”
Southern areas of the country led the way on price falls, with average asking prices dropping by 2.4 per cent in the South East and 2.2 per cent in the South West during the month, while in East Anglia and London they were 1.6 per cent and 1.4 per cent lower respectively.
But asking prices rose in other areas of the country, increasing by 0.5 per cent in the North and 0.4 per cent in both the West Midlands and Wales. However, these areas have seen some of the steepest price falls to date, with average asking prices 3 per cent lower in the West Midlands than they were a year ago, and 2.6 per cent lower in Wales.
Meanwhile, a separate survey by mortgage lender Alliance & Leicester put the number of homeowners looking to move in the next 12 months at 3.25 million.
Richard Taylor, head of mortgages, said: “There are still millions of people who are looking to move and they are doing all they can to get the best price for their property.”